---
title: "What Did Mengniu Lose to Yili?"
description: "After the 2008 melamine scandal, I've been wary of domestic milk, but with a limited salary, I had to drink domestic brands while reassuring myself that if I were to die, it would have happened already. The brands I drink most are Mengniu and Yili, as they have many varieties, reasonable prices, and frequent discounts, making them suitable for mixing with soil. On March 30 this year, Yili released its 2016 annual report, showing total revenue of 60.609 billion yuan and net profit of 5.669 billion yuan. Meanwhile, Mengniu's announcement on the 29th showed that its 2016 full-year sales revenue was 53.78 billion yuan, about 6.8 billion yuan lower than Yili."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-04-16"
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---

# What Did Mengniu Lose to Yili?

> After the 2008 melamine scandal, I've been wary of domestic milk, but with a limited salary, I had to drink domestic brands while reassuring myself that if I were to die, it would have happened already. The brands I drink most are Mengniu and Yili, as they have many varieties, reasonable prices, and frequent discounts, making them suitable for mixing with soil. On March 30 this year, Yili released its 2016 annual report, showing total revenue of 60.609 billion yuan and net profit of 5.669 billion yuan. Meanwhile, Mengniu's announcement on the 29th showed that its 2016 full-year sales revenue was 53.78 billion yuan, about 6.8 billion yuan lower than Yili.

After the 2008 melamine scandal, I've always been a bit uneasy about domestic milk, but constrained by my modest salary, I had to drink domestic brands while comforting myself that if I were to die, it would have happened already.
The brands I drink most are Mengniu and Yili, as they have many varieties, reasonable prices, and frequent discounts, making them suitable for mixing with soil.
On March 30 this year, Yili released its 2016 annual report, showing total revenue of 60.609 billion yuan and net profit of 5.669 billion yuan. Meanwhile, Mengniu's announcement on the 29th showed that its 2016 full-year sales revenue was 53.78 billion yuan, about 6.8 billion yuan lower than Yili.
Even if I contributed my entire lifetime income to buy Mengniu, I couldn't fill the gap.
01
**The Departure of the Founding Team**
**Was the Watershed for Mengniu's Performance**
CCTV's "China Economic Person of the Year" 2003 award citation for a legendary entrepreneur read: "He is a cow, but he ran at the speed of a rocket!"
This legendary figure is Niu Gensheng, the founder of Mengniu. Under his leadership, Mengniu surpassed Yili in just 8 years, claiming the top spot in China's dairy industry.
In 1999, Niu Gensheng founded Mengniu. By 2006, the performance gap between Mengniu and Yili had narrowed to a minimal difference, achieving parity with Yili in 7 years. Zhi Ge listed the revenue comparison between Mengniu and Yili since 2006.
Year | Mengniu Revenue | Yili Revenue | Difference
2006 | 162.46 | 163.39 | -0.93
2007 | 213.18 | 193.60 | 19.58
2008 | 238.65 | 216.59 | 22.06
2009 | 257.10 | 243.24 | 13.86
2010 | 302.65 | 296.64 | 6.01
2011 | 373.88 | 374.50 | -0.62
2012 | 360.80 | 419.91 | -59.11
2013 | 433.57 | 477.79 | -44.22
2014 | 500.00 | 544.36 | -44.36
2015 | 490.27 | 603.60 | -113.33
2016 | 537.80 | 606.09 | -68.29
From the table, it is clear that from 2007 to 2010, Mengniu's revenue exceeded Yili's. In 2011, exactly the watershed year when Yili overtook Mengniu.
That year, Mengniu's performance was 37.388 billion yuan, while Yili's was 37.45 billion yuan, a difference of only 0.07 billion yuan. Mengniu began to gradually lag behind Yili.
That year was also the year of change for Mengniu's team. **Founder Niu Gensheng resigned as chairman of the board, and COFCO Group took over Mengniu**.
With only a change in the senior team, Mengniu was overtaken by Yili. What exactly did it lose?
02
**Niu Gensheng's Management Philosophy**
**When Wealth Gathers, People Scatter; When Wealth Scatters, People Gather**
Niu Gensheng is certainly familiar to everyone. He has many famous sayings that we find insightful every time we read them, such as:
> Small victories rely on wisdom; great victories rely on virtue.
>
> If you have drive, shed your sweat; if you have knowledge, offer your wisdom; if you lack both, please step aside.
>
> Those with virtue and talent are promoted exceptionally; those with virtue but no talent are cultivated; those with talent but no virtue are restricted; those with neither virtue nor talent are firmly rejected.
>
> Managing a business is managing people's hearts.
>
> Management is serious love.
>
> ......
Isn't every one of these particularly reasonable? Niu Gensheng's management, like his aphorisms, is full of philosophical enlightenment.
Wherever he went, Mengniu's Niu Gensheng wore a tie costing 18 yuan, not ashamed but proud, thus calling himself "China's No. 1 Stingy," and declaring himself the "stingy rich man" Niu Gensheng. But he was famously generous to his employees.
Niu Gensheng believed in the business philosophy of "**When wealth gathers, people scatter; when wealth scatters, people gather**." Simply put, these eight characters mean: **Only entrepreneurs willing to pay can attract followers; stingy bosses will eventually be deserted**.
During his tenure as president of Mengniu from 1999 to 2005, he distributed 80% of his annual salary to employees, industry chain partners, and those in need.
He once took the 180,000 yuan the company gave him to buy a Santana and bought employees a Dongfeng bus, a Huaxi mid-size bus, a Tianjin van, and a Dafa pickup truck, because he thought that the company was far from the city and employees had difficulty commuting.
For a fresh graduate with a monthly salary of 40-50 yuan who was getting married, he personally contributed 2,000 yuan, telling the employee to just focus on his work. This fresh graduate was Yang Wenjun, who later followed Niu Gensheng to become the president of Mengniu Group.
**It was precisely through this ability to scatter wealth and gather people that Niu Gensheng made his subordinates give their all and willingly follow him.**
After Niu Gensheng stepped down in 2011, the wave of people who came to Mengniu with him also left one after another.
03
**Promoting a New Culture**
**Is This Still the Mengniu We Know?**
In 2016, Mengniu's human resources established a three-step strategy. The first step was to reform and optimize the organizational structure and processes, and promote a new corporate culture—integrity, innovation, passion, and openness.
Why promote a new culture? And before this, what was the culture of Mengniu under Niu Gensheng?
In its first year of business in 1999, Mengniu's revenue was only 43.65 million yuan. By 2007, sales had grown more than 480 times in 9 years, and by 2010, more than 690 times. Without the collective drive of all employees, how could performance have skyrocketed! Various advertisements leveraging the space program and entertainment videos were everywhere, making it seem for a time that only Mengniu was the most reliable milk to drink. Breakfast milk, Zhen Guoli, Telunsu, and other segmented milk products emerged in succession.
During this process, Mengniu's aggressive marketing campaigns were relentless and innovative, shocking the industry.
It can be said that during that period, Mengniu, with its aggressive marketing, led the industry from product to planning and promotion, setting off a whirlwind in China's dairy industry, both in product innovation and marketing promotion.
**1. Product Innovation**
In terms of products, Mengniu made significant contributions to China's dairy industry, pioneering the era of product segmentation.
Before this, there was only one consumption concept for milk—pure milk consumption. Mengniu began to build a diversified segmentation era for dairy consumption, dividing regular milk into breakfast milk and good-night milk, and also segmenting by population, launching milk for children and milk for women, and also creating the first domestic milk for high-end consumers.
For example: Mengniu Breakfast Milk, Mengniu Good-Night Milk, Mengniu Zhen Guoli, Mengniu Future Growth Star, and the first domestic high-end milk Telunsu. Mengniu's product innovation at that time also set a precedent for the industry, leading China's dairy industry into an era of flourishing diversity.
**2. Aggressive Communication and Promotion**
In communication, whether advertising, event marketing, or entertainment marketing, it was very eye-catching.
For example:
**1) Extremely bold event marketing: "Astronaut's Exclusive Milk" event marketing**
In 2003, China's Shenzhou V went into space, the first manned spacecraft launch in the country, full of great risk, both for the space system and for Yang Liwei, the first astronaut. It was also risky for sponsoring companies, but risk and opportunity coexist; the higher the risk, the greater the opportunity once successful. Ultimately, the first manned spacecraft launch succeeded, becoming the focus of national attention, and Mengniu reaped huge benefits, achieving great success with the sponsorship of the exclusive milk for astronauts.
During this event, Mengniu's super execution was also demonstrated. Just after Shenzhou V landed successfully at 7 a.m., Mengniu's advertisements were released at 9 a.m., from media to bus stop ads to channel terminals, all filled with the image of "exclusive milk for astronauts," quickly maximizing benefits.
**2) Brilliant entertainment marketing: Super Girl Sour Milk**
In 2005, Mengniu's bundled entertainment marketing with Hunan Satellite TV's Super Girl grew from 700 million to 2.5 billion in one year.
At that time, Super Girl had just finished its first season. Although it had some response, it had not yet swept the nation, and few companies recognized its sponsorship value. Mengniu again dared to be the first to eat the crab, boldly sponsoring as the title sponsor.
The 2005 Super Girl became the hottest in its history, with Li Yuchun, Zhou Bichang, Zhang Liangying, and He Jie becoming hot figures that year. Mengniu again achieved great success.
In this entertainment marketing campaign, Mengniu was not just a simple title sponsor, not just investing sponsorship fees, but interacting with its existing channels, forming a combination with Hunan Satellite TV's airtime, combining air and ground, using its own channels to promote Super Girl, maximizing Super Girl's influence, while also achieving great success for sponsor Mengniu and its Sour Milk brand. At that time, it completed the miracle of growing from 700 million to 2.5 billion in one year.
**3) Precise advertising communication**
When Mengniu created China's first high-end milk Telunsu, its precise advertising communication was exemplary. Whether the slogan "Not all milk is called Telunsu" or the communication visuals that perfectly matched the target audience, it was extremely precise. Telunsu quickly swept the nation within a year.
In business operations, product strength and planning/promotion strength are two crucial factors for market performance improvement, and Mengniu undoubtedly did these two points very sharply.
It can be said that at that time, Mengniu was like a martial arts master, with innovative moves and continuous brilliance, accompanied by rocket-like growth in performance. In the entire Chinese dairy industry, whether in product innovation or planning, communication, and promotion, it was extremely sharp and led the industry.
Today's Mengniu seems to have lost its sharpness and dominance, lacking the brilliance that once led the industry.
Compared with Niu Gensheng's Mengniu era, after introducing a stricter quality management system and international strategic partners, Mengniu has made efforts in product quality and strengthened it a lot, but its marketing offensive has been greatly reduced, dimming compared to the past.
Especially in recent years, Mengniu seems to have lost its past sharpness and dominance in marketing operations, with much lower presence than before, fewer impressive activities, and fewer sharp combination tactics. The fierce marketing offensive of Niu Gensheng's team has almost disappeared. Whether in product innovation or planning and promotion, it lacks the past dominance in the industry and the brilliance that once led the industry.
Mengniu under Niu Gensheng had a drive to "compete with heaven" and a fierce wolf-like nature. Under this culture, both employee passion and innovation reached the extreme.
Without Niu Gensheng, this culture is hard to pass on, and Mengniu seems like a shell without a soul. The new HR team, to transfuse new blood into this shell, launched a new corporate culture.
However, can Mengniu with a changed culture still be the Mengniu under Niu Gensheng's governance?
04
**The Old Rival Yili Is the Opposite**
**Still Leading the Industry in Many Aspects**
Although after Niu Gensheng's core team withdrew from Mengniu, Mengniu seemed to lose its past dominance, and the dual-dragon meeting in China's dairy industry no longer existed. Previously, the two teams had continuously staged brilliant contests, but after Niu Gensheng's team withdrew, Yili still maintained its past sharp style, maintaining the former Meng-style, with aggressive offensives.
**1) Seizing popular TV programs**
In recent years, TV media has been impacted by the internet, but TV variety shows have performed well with high ratings, and title sponsorship marketing effects remain good.
In 2015, Yili sponsored popular programs such as "Dad, Where Are We Going?", "Running Man", "The Brain", and "I Am a Singer 4". QQ Star sponsored "Dad, Where Are We Going?", Ambrosial sponsored "Running Man", and Yili Jindian sponsored "The Brain" and "I Am a Singer 4".
With the popularity of these programs, Yili's products also achieved good results, especially QQ Star and Ambrosial, which saw significant performance improvements.
**2) New products performed well: Ambrosial went from 0 to nearly 4 billion in just 2 years**
In recent years, Yili has also actively developed new products and successfully promoted several, such as Ambrosial, infant formula new product "Jinlingguan Zhenhu", and Tuofei'er. The most representative is Ambrosial. Launched in 2014, its first-year performance reached about 1 billion, and in the second year sales reached nearly 4 billion, with astonishing growth.
Although it no longer has its former fierce opponent, Yili still maintains its sharp style.
To some extent, since 2011, compared with Mengniu, the situation has reversed compared with previous years.
05
**Behind the Widening Gap Between the Two Giants**
**Are Two Different Operating Styles**
Behind the widening gap between China's dairy giants are actually two operating styles, which also determine the different outcomes.
**Fierce Wolf-like Practical Style vs. Professional Manager Style**
These are two different styles. The former is fierce and sharp, with explosive power and impact in the market; the latter is relatively steady, but compared with the former, there is a big difference in "speed."
In China's FMCG industry, the fierce wolf-like practical style is extremely important. Wahaha, Nongfu Spring, Dali Group, etc., all have this trait. Their leaders stay close to the front line, with strong market sensitivity, and are sharp in products, planning, promotion, and market expansion. For example, Wahaha's Zong Qinghou spends more than 200 days a year on the market front line, staying close to the market, maintaining rapid impact and fierce style.
Professional managers, on the other hand, often, while being steady, tend to lack the market sensitivity of wolf-like practical companies and the fierce offensive traits, especially many academically trained professional managers who are more likely to lack the sharpness and fierceness of the wolf-like practical school.
Yili's team still maintains the "Meng-style" from Inner Mongolia. The team led by Pan Gang, as a young leader who grew up from Yili's internal practice, inherits the Meng-style genes and also inherits the fierce and sharp characteristics of the former Mengniu-Yili dual-dragon competition. Mengniu, after Niu Gensheng's team left, has lost much of this trait.
Objectively speaking, in recent years, Mengniu's professional manager team has also achieved good results, achieving smooth transition, quality improvement, and sales growth. In recent years, Mengniu has also achieved good growth rates. After all, the gap between Mengniu and Yili and the third place is very large; currently, the third place Guangming has been left behind by more than 20 billion yuan.
But it is clear that compared with Yili, Mengniu still has a significant gap. In just 5 years, or even 4 years, the gap between the two has grown from being evenly matched to a revenue gap of 11 billion yuan, which is relatively large.
The business world is like a battlefield; the strength and style of the teams on both sides are often important factors that determine the outcome! This is worth attention and reflection for marketers!
06
**Mengniu Lagging Behind Yili**
**Only Loses on the Word "People"**
Having said so much, it is not difficult to find that the key person for whether Mengniu can surpass Yili is only one person—Niu Gensheng.
Niu Gensheng, who ran the business, always used the method of "scattering wealth" to manage the hearts of Mengniu's people. When Niu Gensheng left Mengniu, most employees' hearts were no longer with the company.
Under the leadership of the incoming COFCO Group, although they made many efforts, whether building systems or promoting culture, it was difficult to win back the hearts of employees. Although Mengniu also achieved good results and achieved steady sales growth, the gap with Yili, in just 5 years, went from a leading position to lagging behind by about 10 billion yuan.
**The business world is like a battlefield; for an enterprise to win in war, it depends on whether it can unite people's hearts.**
And the key to uniting people's hearts is what Niu Gensheng believed in and practiced—**Retain people with compensation, retain people with career. When wealth scatters, people gather; when wealth gathers, people scatter!**
But this point, although it may be easy to say, 90% of enterprises cannot do it. Therefore, only Mengniu had Niu Gensheng; most enterprises only have countless employees who come and go.
Source: Compiled from "Baidu Wenku" and other sources
-END-


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